This is The End of CrunchPad, Says Michael Arrington

The Crunchpad is dead, says Michael Arrington in a post at TechCrunch. While the tablet PC was close enough to launch for Mike Arrington to “taste,” it ultimately fell apart, due to “greed, jealousy and miscommunication.” We can expect multiple lawsuits soon in the wake of the blow up.

The CrunchPad, named Popular Mechanic’s 10 most brilliant products of the year (although it never could see the day light) is not happening. Mike writes – “The entire project self destructed over nothing more than greed, jealousy and miscommunication… I’m enraged, embarrassed, and just…sad.”

In the CrunchPad’s founding manifesto (July 21, 200) it was said that – “We Want A Dead Simple Web Tablet For $200. Help Us Build It”. Michael Arrington wrote: “So let’s design it, build a few and then open source the specs so anyone can create them.” “If everything works well, we’d then open source the design and software and let anyone build one that wants to.”

They had agreement, now they don’t. That implies that negotiations were concluded at some point. Maybe the original deal was poorly written. I don’t know. The point is that this latest round is a negotiation. When the parties have their knickers in a twist like this and they can’t settle it themselves then it takes outside intervention – usually somebody with cash. It’s very unusual to find someone who would want to part with the enough cash to grease the skids and not want a reasonable ROI.

Arrington’s side of the story says his partners (Fusion Garage) decided to steal the CrunchPad from under his nose. (As opposed to the problem being technical or financial.)

As he mentioned in the article, there are two sides to every story. We’d really like to hear the other side, because I can’t even begin to imagine what kind of foolishness caused them (Fusion Garage) to make this decision. While we are sure that there are other sides of this story, people have already started giving their own version of this product (CrunchPad) fail. e.g. Here is what Ladyada, a hardware manufacturer thinks:

“Although it may seem like an irrelevant point, I’m guessing the price was a big contributor to the project (CrunchPad) death. Why? because when you say up front (with no experience in hardware/manufacturing design) that you’re going to sell it for $x the scramble then becomes “how can each party squeeze margin out?” When there’s very little margin, parties are more willing to bluff knowing that they can walk away and there was almost no $ on the table.

Hardware has this problem, and I’ve seen it so many times, that the founder prices the hardware at only a bit (say ~30%) above the parts cost, not realizing the tons of NRE expenses, ballooning BOM, contractor costs, and the hundreds of other ways the price can easily double. Then they’re stuck: the investors/contract manufacturer/designer/customer hates them. That leads to abandonment.

Please please please, if you decide to do any kind of hardware, add an extra 40% margin on top of whatever you pick. If you don’t need it, you can always cut the price later!”

However, if the CrunchPad had become a reality, Arrington says he had a major retailer lined up to work with him, offering to sell the pad at a “zero margin.” He also says Intel was cutting him a very generous deal.

Having heard all this, somehow this last minute product fail doesn’t surprise me though. With egos that big, and pull so weak, it’s no wonder the project collapsed. May be, as ironical as this might sound, CrunchPad was never destined to be released. In Mike’s own words, “The CrunchPad is in the DeadPool” now. What do you think? What could be the real reason that brought about the CrunchPad’s premature death?